“Workflow” reviewed part II – Organizational decay

“Any aspect of organization, be it task, checklist, container, memorized concepts, or otherwise decays in time as it relates to an intention.”

If you think a bit about it, it is very true. Your organizational “tool” serves its purpose, after which it could, in principle, be discarded. We check off a task we executed, we discard a container which we carried food in, we forget what was foremost in our memory when taking an exam … because it has served its specific usefulness.

Decay in organizations

But discarding a small aspect, such as a task from a task list, is easy. What if the superstructure you built for the achievement of your objectives is much, much larger? Can it still be as easily discarded? Does it decay over time?

In other words, the question I’m actually putting forward is whether and how this concept applies to organizations themselves, as the ultimate large organizational solution to solve a certain larger scale problem?

Structural decay in organizations is not a natural phenomenon

Well, the interesting and perhaps slightly disquieting part of it is that is does not … or not enough. Let me explain, while linking to the basic idea that Kourosh desribed. I would also like to refer you to this post by Clay Shirky in which he provides a summary of some of the ideas Joseph Tainter described in his 1988 book titled “The Collapse of Complex Societies”.

An example

Let’s imagine an organization is started for a specific purpose, let’s say the development of a new piece of revolutionary software, an operating system for example. This operating system is new and revolutionary in that it will eventually change the entire industry, bringing computers into the homes of people because of the relative ease of interacting with what was before a machine only accessible to the high priesthood of hackers.

This organization succeeds beyond belief. It achieves market dominance at adoption rates in excess of 90% of worldwide market share. They continue to develop software which plays well with the operating system. Mistakes are made, but overall, the software aims to solve very specific problems and achieves that clear and identifiable goal. The “cost” of the additional complexity of using the software is significantly lower than the additional value to be gained from its use.

Iteration upon iteration of both the operating system and the accompanying software takes place. The organization and its developers go virtually unchallenged in the markets they are active in, because they are closest to the operating system and can integrate the best.

The iterations become more and more complex, with a higher associated complexity cost. The cost of complexity is the additional time and effort you need to put in to learn how to work with the system. Even with a very clearly stated purpose of the development, there will be a point where the cost of complexity becomes higher than the added value. It will take users more effort to learn to use a tool than they derive from its use.

Now we come into slightly murkier water. Some users have grown up with these tools, and incrementally learned to use them. Their cost of complexity for the prior iteration of the software is already sunk. They have already made the investment to learn the use … and can more easily, at a low additional cost, adapt to the new functionalities. However, there is a group of new users for who do not have sunk costs. The higher the complexity cost, the lower the likelihood these people will invest in this software if there is an alterative available. Hence, due to its increasing complexity, the adoption will diminish and the market share will, slowly at first, start slipping.

Meanwhile, in order to be able to deal with being an organization, the organization has built a support structure, geared towards fullfilling its objective of developing this software. Imagine a finance department, a logistics department, a human resources department. Once established, the support structure will consolidate itself, becoming at the same time more effective and less flexible, because often the two are trade-offs.

Let’s take stock for a minute, where are we? We have an organization which has reached a point where the complexity cost of its core products is higher than their added value and with a significant superstructure optimized for efficiency, but not very flexible. Oh yeah, they do have a virtual monopoly, which appears to be slowly decreasing.

There is a very real “emotional” pressure working here: if we have a monopoly, why change our underlying product which is such a success? We can make some visual changes, but the underlying system should remain the same, because we do not want to change a winning formula. That pressure is organizational fear.

Thinking outside of the example for a minute, this is not dissimilar from people afraid of letting go of their personal productivity practices even if they know they have become too unwieldy

What then may happen, in order to appease the ‘new’ crowd that has not yet invested in the use of its product, is for example a significant revamp of its interface. This often makes matters worse. Users with an initial complexity ‘investment’, trained to use the old system, suddenly find themselves in unfamiliar territory, because they do not understand the interface anymore. They may abandon ship, if they see that possibility.

Now imagine one agile, disruptive player entering that specific market. Neither the core products or the support structure of the initial organization can adapt quickly enough to deal with this challenge. They may have the market, but they do not have the efficiency to react to that market if its taste start turning … and turn they will if the complexity cost of the alternative is lower.

The ultimate end result will decline, failure and collapse of the initial organization.

The lack of organizational decay illustrates its lack of flexibility

But why? Referring to Kourosh, where an individual can easily adapt its organizational support structures, or adopt them, use them for a purpose and then discard them, organizations have a natural tendency to try to give themselves purpose above and beyond their initial purpose. Most often because the consist of people looking for longevity in their professional activities. They sacrify flexibility for efficiency and are ultimately confronted with a situation in which their internal and external complexity makes them a sitting duck for any viable alternative that enters the marketplace.

Organizational decay introduces uncertainty, but adds value in the long term

What I learned from Kourosh is that the support structure, the system, needs to be optimized but we should never become solely dependent on the system. An organization is the ultimate example of a system we depend on for our paycheck and our bread and butter (and chocolat on the weekends, certainly here in Belgium) … we should dare to let organizations and their support structures decay, or at least link them to an end of life that is realistic and after which their usefulness should be revaluated from the ground up. That is the type of change that will bring added value to structures, instead of structures extracting value from their environments.

Just an aside, had this approach been adopted in the mid 1980’s and maintained, the world wide banking industry would have looked significantly different and a lot more relevant.

The impact of decay on people

However, for the people working within such an organization, it introduces uncertainty they often have a hard time dealing with. This is why any organization willing and brave enough to go the route of intentional regular organizational decay needs to ensure its people are trained to be functional and functioning in multiple settings and structures. Call it employability or whatever, but make sure you train your people to be flexible as well, and to retain their value beyond the function they were initially assigned.

This of course requires organizations to let go of the paradigm of the factory worker we have held dear so long, and to look at people as an intangible asset to be developed and invested in, over the long term.

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Published by Ben Broeckx

Professor and academic director internal audit at Antwerp Management School - Writing about leadership, management and governance - Interested in any system that can be explored, analyzed and deconstructed. By day also Director Public Benefits & Public Affairs at Sodexo Benefits & Rewards Services Belgium.
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